03.07.2020 06.45 CDT

The U.S. Department of Labor has issued new proposed regulations that provide guidance on the process that plan fiduciaries should use in selecting ESG investments. In issuing the proposed regulations the DOL targets ESG funds and creates new requirements--and hurdles-to the use of such funds.

DOL Delivers Lump of Coal to ESG Funds

DOL Delivers Lump of Coal to ESG Funds

Proposed DOL regulations would add new restrictions to the use of ESG funds.

The Department of Labor has issued new proposed regulation regarding intended to guide plan fiduciaries seeking to invest in funds that utilize environmental, social and governance (“ESG”) considerations. The proposed regulations identify specific (additional) steps that fiduciaries must take in order to utilize ESG funds and would prohibit use of ESG funds within plan “default” investments.

19.11.2018 08.31 CST

A number of long-term market trends are creating significant pressure on bundled recordkeepers’ revenues. The recordkeepers are responding to these revenue pressures through a variety of ways that impose additional costs on plans and participants.

Fee Compression: Fiduciaries Take Note

Fee Compression: Fiduciaries Take Note

Retirement plan recordkeepers are seeing ongoing pressure on fees. Their approach to developing alternative revenue sources could have implications for plan fiduciaries.

Revenue for “bundled” recordkeepers have been facing downward pressure for years--both on recordkeeping fees and asset management fees. Over the past decade recordkeeping fees have dropped 50 percent and investment fees paid by 401(k) plans have dropped by 38 percent over a similar period. These bundled recordkeepers are looking to fund managers, plans, and individual participants to compensate for this decline. The recordkeepers’ search for new revenue sources can create challenges for plan fiduciaries and sponsors and should be monitored closely.

05.06.2018 12.08 CDT

There is significant evidence that consumers are placing their trust - and their money - with financial professionals who have financial incentives that conflict with consumers’ best interests. It does not appear that the current debates over professionals’ standards of conduct will make real progress in addressing this issue.

Dancing on the Head of a Pin

Dancing on the Head of a Pin

Regulators and courts may focus on the different rules for “investment advisers” and “brokers.” But, in the real world, this distinction confuses investors and undermines consumer protections.

There are key legal differences between investment advisers and brokers. However, consumers do not understand the implications of these differences. Consumers’ confusion is exacerbated by industry advertising, with references to “financial advisers,” “wealth managers” and “financial consultants” further blurring the difference between investment advisers and brokers.

18.05.2018 09.49 CDT

Financial firms have both the opportunity and the financial motivation to move customers from employer-sponsored plans to individual products, such as retail managed accounts and annuities. An investigation of Wells Fargo bank may disclose whether the bank succumbed to the temptation.

Et Tu, Wells Fargo?

Et Tu, Wells Fargo?

An investigation does not mean there was any wrongdoing by Wells Fargo.

Wells Fargo bank is reportedly under investigation for practices in the bank’s retirement plan division. The investigation apparently focuses on practices that may have been intended to move clients from employer-sponsored plans into more expensive individual retirement accounts when they leave their jobs. If these reports are accurate it may help shine a light on industry practices that contribute to plan “leakage.”

19.03.2018 04.01 CDT

A new court decision could give the Administration an opportunity to completely withdraw the regulations expanding ERISA’s definition of fiduciary and limit the ability to expand the scope of ERISA’s fiduciary protections in the future.

Court of Appeals Strikes Down Fiduciary Rule

Court of Appeals Strikes Down Fiduciary Rule

The U.S. Court of Appeals for the Fifth Circuit has issued an opinion striking down the DOL’s new fiduciary rule. The decision will add more (unwelcome) uncertainty.

On March 15 the U.S. Court of Appeals for the Fifth Circuit struck down the DOL’s new fiduciary rule. The decision, in very sweeping terms, concluded that the DOL did not have the regulatory authority to expand the previous definition of “fiduciary” contained in 1975 regulations. The breadth of the Court’s ruling, if upheld, makes it virtually impossible for the DOL to somehow modify the fiduciary proposal or to issue new fiduciary rules.